Greek Residential Real Estate Market Analysis 2025 - Brief

The Greek residential property market is showing steady price growth at the start of 2025, driven by domestic and foreign demand, although the pace of growth is slowing. In the first quarter of 2025, the urban house price index increased by 6.19% year-on-year. Thessaloniki leads in price growth (10.00%), followed by other cities (7.31%) and Athens (5.47%). Average asking prices for houses in the country increased by 8.8% year-on-year.

The market is expected to stabilize in 2025-2027, with price growth below 3.4% per annum. After a crisis-like decline from 2007 to 2017, a recovery began in 2018, supported by economic growth and foreign investment, including through the Golden Visa program. In 2024, price growth slowed to 8.60%.

In 2024, residential property transactions increased by 15.80%, while foreign direct investment increased by 28.93%. The Golden Visa program remains a key factor.

In 2024, new residential construction was completed by 31.77%, but a sharp decline in construction is observed in early 2025 due to the expiration of construction incentives. The market is facing rising construction costs, labor shortages, procedural delays and housing affordability issues, especially in major cities and tourist areas. Rent inflation is rising due to the development of short-term rentals.

The construction and housing market in Greece is under increasing pressure due to rising costs, labor shortages and procedural delays. The housing market is suffering from deteriorating affordability due to excess demand over supply, especially in major cities and tourist locations, leading to a housing shortage. Rents have risen sharply, accelerated by the development of short-term rentals (STRs) and a shortage of supply, with rent growth in the long-term rental segment significantly exceeding overall price growth. In May 2025, actual residential rents increased by 10.9% year-on-year. Despite the rise in rents, market yields are declining, with gross rental yields for residential properties averaging 4.50%. High rent growth raises concerns about housing affordability and poses a risk to the national economy, as it could hit the disposable income of poor households. The European Central Bank (ECB) has cut its base rates, leading to lower interest rates on home loans, but lending volumes remain subdued. The total value of new home loans has shown a marked increase, but net growth in household home loans remains negative. The Greek economy has maintained its growth momentum, and the European Commission expects this to continue. Greece is expected to grow strongly in 2025 and 2026, driven by EU investment and robust consumption. Consumer price inflation is declining but remains above the euro area average. The IMF forecasts moderate growth in the medium term due to demographic pressures and the end of EU funding. The labor market is improving and unemployment is falling. Real wages are expected to rise further.

The lingering legacy of the crisis and structural issues such as high public debt and non-performing private debt weigh on medium-term growth prospects. The IMF notes the need to address the legacy of the crisis and imbalances for sustainable growth.

Fitch Ratings affirmed Greece at 'BBB-' and revised its outlook to positive, citing fiscal surpluses and declining public debt.